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As filed with the Securities and Exchange Commission on April 10, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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MARTEK BIOSCIENCES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 52-1399362
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
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6480 DOBBIN ROAD
COLUMBIA, MARYLAND 21045
(410) 740-0081
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
HENRY LINSERT, JR.
CHIEF EXECUTIVE OFFICER
MARTEK BIOSCIENCES CORPORATION
6480 DOBBIN ROAD
COLUMBIA, MARYLAND 21045
(410) 740-0081
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
MICHAEL J. SILVER
HOGAN & HARTSON L.L.P.
111 SOUTH CALVERT STREET, 16TH FLOOR
BALTIMORE, MARYLAND 21202
(410) 659-2700
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than the securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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Proposed
Maximum Proposed
Amount Offering Maximum Amount of
Title of Securities to to be Price Per Aggregate Registration
be Registered (1) Registered Share Offering Price Fee
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<S> <C> <C> <C>
Common Stock, par value $.10 per 26,200 Shares (3) 13.16(4) $344,792(4) $ 91.03
share (2)
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Warrants to Purchase Common Stock 7,858 Warrants (3)
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Common Stock Underlying 7,858 Shares (3) 13.16(4) $103,411(4) $ 27.30
Warrants(2)
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Total: 34,058 13.16 $448,203 $118.33
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</TABLE>
(1) The securities being registered hereby consist of shares of common stock
offered from time to time for resale by certain selling security holders,
common stock warrants offered from time to time for resale by these selling
securityholders, and common stock issuable upon exercise of these warrants
following transfer of these warrants to persons other than these selling
securityholders (and their affiliates).
(2) Includes Series A Preferred Share Purchase Rights attached thereto, for
which no separate fee is payable pursuant to Rule 457(i).
(3) In addition to the 26,200 shares and the 7,858 warrants and shares
underlying warrants, 2,839,568 shares and 797,033 warrants and shares
underlying warrants previously registered by the Company in connection with
Registration Statement Nos. 333-53803 and 333-81739 are being carried
forward pursuant to Rule 429 under the Securities Act on the combined
prospectus included herein. An aggregate fee of $11,626 was previously paid
to the Commission in connection with Registration Statement Nos. 333-53803
and 333-81739.
(4) Estimated pursuant to Rule 457(c) solely for the purpose of calculating the
amount of the registration fee and based upon the average of the high and
low prices per share of Martek Biosciences Corporation's common stock, par
value $.10 per share, on April 3, 2000, as reported on the Nasdaq Stock
Market's National Market, of $13.16.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT, THE PROSPECTUS INCLUDED
HEREIN IS A COMBINED PROSPECTUS AND RELATES TO THIS REGISTRATION STATEMENT AND
REGISTRATION STATEMENT NOS. 333-53803 AND 333-81739, WHICH WERE DECLARED
EFFECTIVE ON JUNE 18, 1998 AND JULY 14, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 2
INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT
SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SEC IS
EFFECTIVE. THIS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.
PROSPECTUS SUBJECT TO COMPLETION
APRIL __ , 2000
MARTEK BIOSCIENCES CORPORATION
2,865,768 SHARES OF COMMON STOCK
804,891 COMMON STOCK PURCHASE WARRANTS
We have prepared this prospectus to allow the selling stockholders we
identify herein to sell up to 2,865,768 shares of our common stock and up to
804,891 common stock purchase warrants. We will not receive any of the proceeds
from the sale of common stock by the selling stockholders.
Our common stock is traded on the Nasdaq Stock Market under the symbol
"MATK." On March 30, 2000, the last reported sale price of our common stock on
Nasdaq was $13.13 per share.
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INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 2.
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NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THE COMMON
STOCK OR THE COMMON STOCK PURCHASE WARRANTS, NOR HAVE THESE ORGANIZATIONS
DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is April , 2000.
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THE COMPANY
Martek Biosciences Corporation develops, manufactures and sells products
from microalgae. Our products include: (1) specialty, nutritional oils for
infant formula, nutritional supplements and food ingredients that may play a
beneficial role in promoting mental and cardiovascular health, and in the
development of the eyes and central nervous system in newborns; (2) high value
reagents and technologies to visualize molecular interactions for drug discovery
and development; and (3) new, powerful fluorescent markers for diagnostics,
rapid miniaturized screening, and gene and protein detection. Our principal
executive offices are located at 6480 Dobbin Road, Columbia, Maryland 21045, and
our telephone number is (410) 740-0081.
RISK FACTORS
In evaluating our business, you should carefully consider the following
factors, as well as other information in this prospectus before purchasing our
common stock.
You should be cautioned that the following important factors have
affected, and in the future could affect, our actual results. There may also be
additional factors not discussed in this report that could also affect future
results. These factors could cause our future financial results to differ
materially from those expressed in any forward-looking statements made by us.
Forward-looking statements may relate to such matters as:
- our ability to generate future revenues;
- the potential commercialization of our products;
- the optimization of production costs; and
- our ability to enter into future business collaborations and
marketing partnerships.
Forward-looking statements may include words such as "will," "should,"
"could," "anticipate," "believe," "plan," "estimate," "expect," "intend," and
other similar expressions. This list does not constitute all factors which you
should consider prior to making an investment decision in our securities. You
should also not assume that the information contained herein is complete or
accurate in all respects after the date of this filing. We disclaim any duty to
update the statements contained herein.
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HISTORY OF OPERATING LOSSES; UNCERTAINTY OF FUTURE FINANCIAL RESULTS.
We have experienced net operating losses since our inception. We expect
such losses to continue until significant sales of our nutritional oils occur
and/or until significant royalties from sales of infant formula products
containing our oils are recognized. We expect to have quarter-to-quarter and
year-to-year fluctuations in revenues, expenses and losses, some of which could
be significant. Future financial results will be affected by, among other
things, the following factors:
- our ability to successfully complete the commercialization and cost
optimization of our products;
- the willingness and ability of infant formula licensees to
incorporate our product into their infant formula products;
- the willingness of potential strategic partners to market our
products;
- growth in revenues from our nutritional oils;
- growth in revenues from sales of our products for use in molecular
structure research and structure-based drug design;
- the progress of our research and development programs;
- the progress of our preclinical and clinical product studies;
- the time, costs and ability of obtaining regulatory approvals for
those products subject to such approval;
- our ability to protect our proprietary rights;
- the costs of protecting our patent claims;
- competing technological and market developments;
- manufacturing costs associated with our various products and
potential products; and
- the costs of commercializing and marketing our products.
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EARLY STAGE OF THE COMPANY AND ITS PRODUCTS.
Martek was founded in 1985. Certain of our products require substantial
additional research and development. Some require laboratory and clinical
testing and regulatory approval. In addition, although we anticipate the
introduction of new products over the next several years, some of our potential
products, especially in the area of pharmaceuticals, are not expected to become
commercially available for many years, if at all. There is no assurance that:
- we will successfully complete our product development efforts;
- we will obtain required regulatory approvals on a timely basis or at
all;
- we will be capable of manufacturing our products in commercial
quantities at a reasonable cost; or
- any new products, if introduced, will achieve market acceptance.
We expect to receive most of our future revenues from sales of products, royalty
income and licensing fees. A portion of our revenues to date has come from
research and development contracts (primarily from the federal government) and
federal government grants. We first realized revenues from our products for use
in molecular structure research and structure-based drug design in 1989. We
recognized revenues from license fees and sales of sample quantities of
nutritional and diagnostic products in 1992. In 1995, we recognized our first
product and royalty revenues from sales of infant formula containing our DHA and
ARA. In 1996, we began to realize revenues from the sale of Neuromins(R), a DHA
dietary supplement.
NEED FOR ADDITIONAL CAPITAL.
Additional funds will be required to:
- enable us to continue our research and development activities;
- conduct preclinical and clinical studies; and
- manufacture and market our products.
Management is likely to pursue various financing alternatives to obtain these
funds, including:
- asset-based borrowing;
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- equity issuances;
- additional lease financing; and/or
- collaborative arrangements with partners.
The level of expenditures required for these activities will depend in part on
the extent to which we develop, manufacture and market our products
independently or with other companies through collaborative arrangements. Our
future capital requirements will also depend, among other things, on one or more
of the following factors:
- growth in our infant formula and nutritional product sales;
- the extent and progress of our research and development programs;
- the progress of preclinical and clinical studies;
- the time and costs of obtaining regulatory clearances for those
products subject to such clearances;
- the costs involved in filing, protecting and enforcing patent
claims;
- competing technological and market developments;
- the cost of capital expenditures at our manufacturing facilities;
- the cost of acquiring additional and/or operating existing
manufacturing facilities for our various products and potential
products (depending on which products we decide to manufacture and
continue to manufacture ourselves);
- the costs of marketing and commercializing our products; and
- our ability to attract partners to help market and/or manufacture
our products.
There is no assurance that funding to carry on these activities will be
available at all or on favorable terms to permit successful commercialization of
our products. We have only limited debt financing arrangements. These
arrangements require us to meet certain financial covenants related to our
outstanding term loans. There is no assurance that we will be able to:
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- continue such arrangements;
- continue to comply with debt covenants; and/or
- establish additional debt financing arrangements on satisfactory
terms, if at all.
If adequate funds are not available, we may be required to:
- curtail one or more of our research and development programs;
- curtail manufacturing and commercialization programs; and/or
- obtain funds through arrangements with collaborative partners or
others, if possible.
These arrangements may require us to relinquish certain technology or product
rights including patent and other intellectual property rights.
DEPENDENCE ON THIRD PARTIES; RELIANCE ON FUTURE COLLABORATIONS.
Future revenues from our nutritional oils are largely dependent on
factors over which we will have no control. To date, a portion of our revenues
has consisted of license fees and anniversary payments received from infant
formula manufacturers which have licensed our nutritional oils. Under these
agreements, we are entitled to receive royalty payments based on the licensees'
sales of products including our nutritional oils. These licensees will be
responsible for performing all clinical testing on, obtaining regulatory
approvals for and marketing products containing our nutritional oils. These
licensees are not required to use our nutritional oils in any of their products.
They are also not restricted under the licensing agreements from obtaining
docosahexaenoic acid ("DHA") or arachidonic acid ("ARA") from other sources for
use in their infant formula products. Although some of our licensees have
introduced infant formula products containing our nutritional oils overseas, we
cannot predict whether any licensee will introduce products containing our oils
in the U.S., or will broaden its use of our oils overseas or whether our oils
will be used by any of our other licensees in their infant formula products.
Our strategy for the development, clinical testing, manufacturing and
commercialization of certain of our products includes entering into various
collaborations with corporate partners, licensors, licensees and others. In
1997, we entered into a supply agreement with a third party manufacturer for its
ARA-containing oil. Although we are able to produce ARA oil in our Kentucky
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manufacturing plant, a halt in supply from this third party ARA oil manufacturer
could adversely impact our ability to meet product demand in the short-run. It
could also adversely impact our ability to meet product demand in the long-run
if this source of ARA oil could not be replaced. There is no assurance that we
will negotiate other collaborative arrangements in the future on acceptable
terms, if at all, or that such collaborative arrangements will be beneficial to
our operations. If we cannot establish such arrangements, we may face increased
capital requirements to undertake such activities at our own expense. As a
result, we could encounter significant delays in introducing our products into
certain markets. This could also adversely affect the development, manufacture,
marketing and sale of products in such markets. For example, our continuing
ability to generate nutritional oil-related revenues depends on our ability to
enter into agreements with additional licensees and/or marketing partners. Some
of our nutritional oil licensing agreements contain provisions which will not
allow us to enter into future agreements containing payment terms more favorable
than those granted to current licensees. Such provisions may restrict our
ability to negotiate with potential infant formula licensees.
DEPENDENCE ON MAJOR CUSTOMERS.
Our dependence on sizable product orders from infant formula
licensees and other marketing partners will make the relationship with each
customer critically important to our business. While we have detailed contracts
with each of our major customers, changes to product pricing, royalty rates and
delivery timetables may be required to meet their demands and expectations.
There is no assurance that we will be able to manage our licensees and other
customer relationships successfully. Our major customers are large and complex
and the launch cycles of new products are typically long and unpredictable. This
requires us to make considerable early investments in account management and
other efforts without the assurance of future revenues. There is no assurance
that we will be able to convert these investments into significant revenue
generating relationships.
SIGNIFICANT TECHNOLOGICAL CHANGE AND COMPETITION.
We operate in rapidly evolving fields. Competition from larger, more
experienced and better capitalized companies has been and will continue to be
intense. There is no assurance that developments by others will not render our
products or technologies obsolete or noncompetitive, or that we will keep pace
with new technological developments. Currently, DHA-containing fish oils provide
alternative sources of DHA, and we are aware of another company which produces
DHA from fungal sources. In addition, DHA and ARA have been derived from egg
yolk lipids, and we are currently aware of several European infant formula
manufacturers that are adding DHA derived from egg yolk lipids and/or fish oil
to their infant formula. We have obtained seven U.S. patents and a number of
patents
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outside the U.S. covering certain aspects of our nutritional oils to date. We
have additional patent applications pending covering certain aspects of these
DHA- and ARA-containing oils. However, we have not yet been awarded any European
patents relating to our ARA-containing oil. Accordingly, competitors may be able
to produce, sell and use ARA in Europe until patents are issued or have been
invalidated using similar or identical processes to those used by us. Generally,
however, they are prohibited from manufacturing, using or selling materials
where patents have been issued. Competitors may be able to produce, sell and use
DHA- and/or ARA-containing oils in countries where we have not applied for
patent protection. In addition, competitors may produce certain DHA- and
ARA-containing oils that are not covered by our patents. We are aware of several
other companies offering ARA-containing oils for sale. In addition, there is no
assurance that other sources of DHA and ARA, the two primary components of our
nutritional oils, will not become commercially viable.
UNCERTAINTY REGARDING PATENTS AND PROPRIETARY TECHNOLOGY.
Our success depends on our ability to:
- obtain patent protection for our products;
- maintain trade secret protection; and
- operate without infringing the proprietary rights of others.
Our policy is to aggressively protect our proprietary technology through patents
and, in some cases, trade secrets. Additionally, in certain cases we rely on the
licenses of patents and technology of third parties. We have obtained
approximately 25 U.S. patents covering various aspects of our technology. These
patents will expire on various dates between 2007 and 2015. We have filed, and
intend to continue to file, applications for additional patents covering both
products and processes as appropriate. There is no assurance that:
- the relevant authorities will grant any patent applications filed
by, assigned to, or licensed to, us;
- we will develop additional products that are patentable; and
- any patents issued to or licensed by us will provide us with any
competitive advantages or adequate protection for inventions.
Moreover, there is no assurance that any patents issued to or licensed by us
will not be challenged, invalidated or circumvented by others.
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There is no assurance that issued patents, or patents that may issue,
will provide protection against competitive products or otherwise be
commercially valuable. Furthermore, since patent laws relating to the scope of
claims in the fields of health care and biosciences are still evolving, our
patent rights are subject to this uncertainty. Our patent rights on our products
therefore might conflict with the patent rights of others, whether existing now
or in the future. Alternatively, the products of others could infringe our
patent rights. The defense and prosecution of patent claims is both costly and
time consuming, even if the outcome were favorable to us. An adverse outcome
could:
- subject us to significant liabilities to third parties;
- require disputed rights to be licensed from third parties; and/or
- require us to cease selling our products.
We have obtained seven U.S. patents covering certain aspects of our DHA
and/or ARA oils. We have applied for other patents in the United States covering
certain other aspects of our nutritional oils. We have also filed patent
applications on a selective basis in other industrialized countries, some of
which are pending and some of which have been granted. We are unable to predict,
however, whether these patents will be challenged, invalidated or circumvented
by others. Failure to obtain adequate patent protection for our nutritional oils
would have a material adverse affect on our results of operations. This could
particularly affect:
- future sales of our nutritional oils;
- future royalties on sales of infant formula containing our oils; and
- future license fees related to our oils.
In particular, failure to maintain patent protection could permit our
competitors to produce products which could directly compete with our
nutritional oils using similar or identical processes. It is also possible that
the infant formula manufacturers currently under license by us or potential
future licensees may choose formula ingredients from these competitors if they
choose to include the ingredients in their formulas at all.
Other patents that we have cover:
- our photobioreactor system which is used for culturing microalgae;
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- our Celtone and Celtone M technology; and
- our combinatorial library technology.
We also rely on trade secrets and proprietary know-how, which we protect
in part by confidentiality agreements with our collaborators, employees and
consultants. There is no assurance that:
- other parties to these agreements will not breach them;
- we will have adequate remedies for any such breach; or
- competitors will not otherwise learn of or independently develop our
trade secrets.
RISKS ASSOCIATED WITH INFANT FORMULA AND NUTRITIONAL PRODUCTS INDUSTRIES.
To the extent that our nutritional oils are included in infant formula or in
nutritional products for consumer use, we are subject to the risks generally
associated with these industries. These risks include, among others:
- product tampering or production defects which may require a recall
or may reduce the demand for such products;
- the risk that authorities may ban an ingredient used in such
products, including our nutritional oils, limit its use or declare
it unhealthful; and/or
- sales of infant formula may decline or authorities may limit or
discontinue use of our nutritional oils due to perceived health
concerns, adverse publicity or other reasons beyond our control.
POTENTIAL DIFFICULTY IN OBTAINING FDA AND OTHER GOVERNMENT APPROVALS.
A number of government authorities in the United States and other
countries regulate our products and our manufacturing and research activities.
This includes the FDA pursuant to the Federal Food, Drug and Cosmetic Act (the
"FDC Act"). The FDA regulates, to varying degrees and sometimes in very
different ways, infant formulas, dietary supplements, medical foods, enteral and
parenteral nutritional products and diagnostic and pharmaceutical products.
Their regulatory authority includes the manufacture and labeling of such
products. Generally, authorities regulate prescription pharmaceuticals and
certain types of diagnostic
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products more rigorously than foods, such as dietary supplements. Infant
formulas are special types of food that are regulated more rigorously than most
other types of foods. Federal and state laws, regulations and policies are
always subject to change and depend heavily on administrative policies and
interpretations. There is no assurance that any changes to federal and state
laws will not have a material adverse effect on the company.
Our infant formula licensees are responsible for obtaining the requisite
regulatory clearances to market their products containing our oils. To date,
none of our infant formula licensees have obtained the necessary approval to
sell an infant formula product containing our oils in the United States. Sales
of our products outside the United States are subject to foreign regulatory
requirements that may vary widely from country to country. Term infant formula
products containing our nutritional oils are currently being marketed outside
the U.S. in seven countries. Pre-term infant formula products containing our
oils are currently being marketed outside the U.S. in over 60 countries. We
understand that our licensees have received appropriate regulatory clearances as
needed to market products containing our oils in those countries.
The time required to obtain clearances from additional foreign countries
may vary. It may be longer or shorter than that required by the FDA. There is no
assurance that additional foreign clearances can be obtained or met on a timely
basis, if at all.
We are responding, with the help of our licensees, to certain questions
raised by the FDA in connection with evaluating our oils for inclusion in U.S.
infant formula. We feel that the process of obtaining FDA approval will take at
least another six to twelve months. There is no assurance that:
- we will be able to, with the assistance of our licensees, adequately
respond to the FDA's questions;
- our licensees will continue to press forward;
- the FDA will in fact grant clearances;
- the process will not involve significant delays;
- potential delays will not materially and adversely affect the timing
and extent of potential future introductions of our products; or
- once and if approval is obtained, a licensee will actually market a
U.S. infant formula product containing our oils.
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There is no assurance that the FDC Act will not impose food additive
regulation on DHA and ARA used in medical foods, infant formulas or enteral
nutritional products. Use of DHA and ARA in medical foods may also require
additional supportive data.
The process of obtaining FDA clearances can be time-consuming and
expensive. There is no assurance that the FDA will grant such clearances. The
FDA review process may involve delays that may materially and adversely affect
the testing, marketing and sale of our products. Moreover, regulatory clearances
for products such as medical devices, new drugs, or new food additives, even if
granted, may include significant limitations on their uses. Additionally, the
FDA could withdraw product clearances for failure to comply with regulatory
standards. There is no assurance that any clearances that are required, once
obtained, will not be withdrawn or that compliance with other regulatory
requirements can be maintained.
Many of our products are in research and development phases. We cannot
predict all regulatory requirements or issues that may apply to or arise in
connection with our products. Changes in existing laws, regulations or policies
or the adoption of new laws, regulations or policies could prevent us or our
licensees or collaborators from achieving compliance with regulatory
requirements. Such changes could also affect the timing of achieving such
clearances.
Since the FDA regulatory process may be costly and time consuming, we
will decide on a product-by-product basis whether to handle their requirements
independently or to assign such responsibilities to our licensees or future
collaborative partners. There is no assurance that we will be able to obtain
such regulatory clearances, if required, on a timely basis or at all. If such
clearances are delayed or not achieved at all, it may adversely effect our
business, financial condition and results of operations. If we lose previously
received approvals or clearances, or fail to comply with existing or future
regulatory requirements, it would have a similar adverse effect.
We are currently required to meet FDA Good Manufacturing Practices
("GMP") requirements as applicable to infant formula and dietary supplements.
GMP regulations specify component and product testing standards, control quality
assurance requirements, and records and other documentation controls. Depending
upon the type of FDA application that is submitted, compliance with relevant GMP
requirements can be difficult and time consuming. If we continue to manufacture
our own products we will continue to fall under the GMP requirements of the FDA.
It may even be necessary in the future to meet more stringent drug GMP
requirements. There is no assurance that we can meet relevant FDA manufacturing
requirements, particularly for scale-up operations involving product marketing
applications. Further, we have only limited experience in the area of regulatory
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compliance with respect to our products. There is no assurance that we will be
able to continue to manufacture our nutritional oils in accordance with relevant
infant formula and dietary supplement requirements for commercial use. State and
federal agencies, including the FDA and comparable agencies in other countries,
conduct periodic inspections to monitor ongoing compliance with GMP and other
applicable regulatory requirements. A determination that we are in violation of
such GMP and other regulations could lead to the imposition of civil penalties,
including fines, product recalls or product seizures. In situations where
serious violations are noted, criminal sanctions may be imposed.
Each line of products that is or may be marketed by us or our
collaborators can present unique regulatory problems and risks, depending on the
product type, uses and method of manufacture.
The Federal Dietary Supplement Health and Education Act of 1994
("DSHEA") regulates the use and marketing of dietary supplements. The DSHEA:
- sets forth standards for adulteration of dietary supplements or
ingredients;
- prescribes detailed requirements for labeling dietary supplements;
and
- establishes GMP requirements for dietary supplements.
We are currently marketing a line of DHA dietary supplements, Neuromins(R) and
Neuromins(R)PL. In addition, we are researching and developing new applications
for our DHA and ARA oils. There is no assurance that we will be able to comply
with the requirements of the DSHEA or any other regulations that the FDA may
promulgate regarding DHA or ARA use as a dietary supplement.
Our fluorescent detection and other products derived from microalgae are
subject to potential regulation by the FDA as either medical devices or as a
combination medical device/drug product to the extent that they are used in the
diagnosis, mitigation, treatment, cure or prevention of diseases. This
classification subjects these products to premarket clearances and/or regulatory
approvals. There is no assurance that:
- we or our collaborators will be able to develop the extensive safety
and efficacy data needed to support FDA premarket clearances and/or
regulatory approvals for these products; or
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- the FDA ultimately would authorize the marketing of such products on
a timely basis, if at all.
For pharmaceutical uses of products derived from microalgae, there is no
assurance that required clinical testing of our products will be completed
successfully within any specified time period, if at all. Additionally, there is
no assurance that:
- we will be able to develop the extensive data needed to establish
the safety and efficacy of our products for approval for drug uses;
and
- authorities will not begin to regulate these drug products as
biological products or as controlled substances, which would affect
marketing and other requirements.
LIMITED MANUFACTURING AND SALES AND MARKETING EXPERIENCE AND CAPABILITIES.
We have limited experience operating our manufacturing facility. In
1995, we acquired a fermentation plant in Winchester, Kentucky to manufacture
our nutritional oils. During 1996, we completed the construction of an oil
extraction and refining facility in this plant. There is no assurance that we
will be able to scale-up or successfully optimize production of our nutritional
oils. There is also no assurance that these production facilities will be
sufficient to meet future demand for our products. If we do not develop adequate
manufacturing capability or contract for manufacturing on acceptable terms, we
may not be able to commercialize some of our current or planned products. Or, if
we are able to adequately manufacture them, commercialization of the products
may be significantly delayed. In addition, we have only limited experience
managing operations at a remote geographic location. Managing a remote
manufacturing plant may place a substantial strain on our managerial resources.
We believe that our Winchester, Kentucky plant will be able to produce
our nutritional DHA oil in sufficient quantity to meet near-term demand.
Nevertheless, because demand for our nutritional DHA oil is based on factors
beyond our control, we are unable to predict whether we have sufficient
manufacturing capacity to meet any such future demand. During 1997, we entered
into a supply agreement with one of the world's largest fermentation companies
to provide ARA oil. In addition, we have conducted DHA production trials with
third-party manufacturers to prepare for future DHA oil demand in excess of our
current plant capacity. Although we believe that we will be able to use third
party manufacturing for our DHA oil if demand requires, there is no assurance
that we will be able to do so successfully. The failure to meet demand for our
nutritional oils
-14-
<PAGE> 16
could encourage our infant formula licensees and other nutritional product
customers to look for alternative manufacturing sources. We currently
manufacture all of our DHA oil at our Winchester, Kentucky plant. If our
Winchester plant were to experience a catastrophic event that would limit or
stop our production capabilities, we currently do not have a third party
manufacturer available. Although we believe that we would be able to obtain a
third party manufacturer, if such an event were to occur, there is no assurance
that we will be able to do so successfully.
We currently do not have the capability to manufacture therapeutic and
diagnostic products in accordance with GMP requirements. Should we decide to
manufacture and scale-up the production of future diagnostic and pharmaceutical
products, we would incur substantial start-up expenses, we would need to expand
our facilities, and we would have to hire additional personnel.
We market infant formula oils and nutritional supplements primarily
through distributors, and to a lesser extent, directly to consumers. We market
our products for use in molecular structure research and structure-based drug
design, and fluorescent detection both directly to end users and through
distributors. Other nutritional products and products that we develop in the
diagnostic and pharmaceutical areas will require us to form corporate alliances
with companies capable of marketing such products and/or develop our own sales
and marketing force. We are currently pursuing a long-term marketing partnership
with a large nutritional products and/or pharmaceutical company to promote our
non-infant formula nutritional oil products. There is no assurance that we will
be able to establish an effective sales or marketing force, establish additional
third-party sales and marketing arrangements, or close a large-scale marketing
partnership. Even if we are able to achieve any of the above, the cost may be
prohibitive.
NO CLINICAL AND LIMITED REGULATORY COMPLIANCE CAPABILITIES.
We have limited experience and capabilities in the area of product
testing. We have limited experience and capabilities in the area of regulatory
compliance with respect to our products. We will have to expend significant sums
of money to acquire and expand such capabilities. We may need to reach
collaborative arrangements with third parties to provide these capabilities or
contract with third parties to provide these capabilities. These capabilities
will be important to us for the successful commercialization of our existing and
potential future nutritional, human diagnostic and pharmaceutical products.
We will depend on our current licensees to obtain any required
regulatory clearances for our nutritional oils which they will use as infant
formula ingredients. Although we believe that our infant formula licensees will
perform required testing and obtain any required regulatory clearances, we
cannot control the timing or the resources that they will devote to these
activities. We may, in the future, decide to seek FDA clearances ourselves for
our nutritional oils or other nutritional products, if such clearances are
required. In the area of human diagnostics, we have not yet decided whether to
develop in-house capability, contract with third parties, seek collaborative
arrangements with partners or use a
-15-
<PAGE> 17
combination of the three to test our product candidates and obtain any required
regulatory clearances. If we were to manufacture these diagnostic products for
certain uses, it would be subject to applicable regulatory requirements. For
potential pharmaceutical products, we will likely contract with third parties
and seek collaborative arrangements. In any case, these activities may require
the devotion of substantial resources and a significant portion of our time.
There is no assurance that we can effectively test and obtain regulatory
clearances for our products. Delays in testing or obtaining such regulatory
clearances may result in delay in or the inability to commercialize the affected
product. See "--Dependence on Third Parties; Reliance on Future Collaborations."
EXPOSURE TO PRODUCT LIABILITY CLAIMS.
We face an inherent business risk of exposure to product liability
claims alleging that the use of our technology or products resulted in adverse
effects. Such risk exists in the conduct of clinical studies and even with
respect to those products, if any, that receive regulatory clearances for
commercial sale. There is no assurance that our current level of product and
clinical study liability insurance together with indemnification rights under
our infant formula license agreements and other collaborative arrangements will
be adequate to protect us from this exposure. It is uncertain whether we will be
able to obtain increased levels of insurance as we grow. There is no assurance
that this level of insurance would be economically practical or that we would be
able to renew our current or future policies. A product liability claim or
recall in excess of insured amounts or amounts recoverable under applicable
contractual arrangements could adversely affect our business, financial
condition and future prospects.
DEPENDENCE UPON KEY PERSONNEL.
We are highly dependent on the principal members of our management,
production, sales and marketing and scientific staff. The loss of certain key
management and scientific employees could have a material adverse effect on our
operations. In addition, we believe that our future success will depend in large
part upon our ability to attract and retain highly skilled scientific,
managerial and marketing personnel. We face competition for such personnel from
other companies, research and academic institutions, government entities and
other organizations. There is no assurance that we will be successful in hiring
or retaining the personnel we require for continued growth.
LIMITED AVAILABILITY OF CERTAIN SUPPLIES.
The availability of carbon-13 and nitrogen-15 is critical for production
of our products for use in drug design. Although the current supplies of these
items are adequate for our near-term needs, they may not be adequate if the
demand for
-16-
<PAGE> 18
our products for use in drug design and/or breath test diagnosis were to grow
significantly.
POSSIBLE VOLATILITY OF STOCK PRICE; LIMITED LIQUIDITY; ABSENCE OF DIVIDENDS.
The market price of our common stock may experience a high level of
volatility, as frequently occurs with publicly traded emerging growth companies
and biosciences companies. The market price of our stock may be significantly
impacted, among other things, by:
- announcements of technological innovations or new commercial
products by us or our competitors;
- developments or disputes concerning patent or proprietary rights;
- publicity regarding actual or potential medical results relating to
products under development by us or our competitors;
- general regulatory developments affecting our products in both the
United States and foreign countries;
- market conditions for emerging growth companies and biosciences
companies and economic and other internal and external factors;
- period-to-period fluctuations in financial results; and
- our ability to enter into collaborations with third parties to
market our products.
Since our initial public offering of common stock on November 23, 1993, the
average daily trading volume in the common stock as reported on the Nasdaq
National Market has been relatively low. There is no assurance that a more
active trading market will develop in the future. We have never declared or paid
any cash dividends on our common stock and do not intend to do so for the
foreseeable future.
RISKS RELATIVE TO ANTI-TAKEOVER DEVICES.
Our Board of Directors is divided into three classes with each class of
directors being elected to three-year terms on a rotating basis. As such, only
one-third of the members of the Board of Directors stand for election every
year. We have adopted a stockholder rights plan which may have the effect of
deterring hostile or coercive attempts to acquire the company. The plan does
this through the
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<PAGE> 19
distribution of rights to stockholders enabling those stockholders to acquire
shares of our common stock, or that of an acquiror, at a substantial discount to
the public market price should any person or group acquire more than 20% of the
common stock without approval of the Board of Directors under certain
circumstances. We have reserved 300,000 shares of Series A Junior Participating
Preferred Stock for issuance in connection with the Stockholder Rights Plan. We
are authorized to issue an additional 4,700,000 shares of preferred stock in one
or more series, having terms fixed by the Board of Directors, without a
stockholder vote. While the Board of Directors has no current intentions or
plans to issue any preferred stock, issuance of these shares could also be used
as an anti-takeover device.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
To the extent that the outstanding stock options and warrants described
below are exercised, the percentage ownership of certain of our stockholders
will be diluted. As of January 14, 2000, we had 16,517,364 outstanding shares of
common stock, substantially all of which are available for sale in the public
marketplace. As of January 14, 2000, there were also outstanding stock options
to purchase an aggregate of 2,222,725 shares of common stock at various exercise
prices ranging from $6.25 to $34.25 per share. There have also been warrants
issued in connection with the Common Stock and Warrant Purchase Agreements dated
April 27, 1998 and May 28, 1999 totaling 706,599 shares at exercise prices
between $7.51 and $18.76 per share. If we elect to sell all the shares of common
stock and warrants which have not been sold pursuant to the April 27, 1998
purchase agreement but which, under certain circumstances, the selling
stockholders are irrevocably obligated to purchase, there would be up to an
additional outstanding 819,454 shares of common stock and 245,836 warrants, with
exercise prices ranging from $15.01 to $18.76 per share. Shares of common stock
which may be issued under outstanding options and warrants will be available for
sale in the public markets. In addition, certain holders of the common stock
have certain demand and piggyback registration rights pursuant to a registration
rights agreement between Martek and these holders. No prediction can be made as
to the effect, if any, that sales of shares of common stock or the availability
of such shares for sale will have on the market prices of the common stock
prevailing from time to time. The possibility that substantial amounts of common
stock may be sold in the public market may adversely affect prevailing market
prices for the common stock. This could impair our ability to raise capital
through the sale of equity securities. Further, if we were required to include
shares, through exercise of the outstanding piggyback registration rights, in a
company-initiated registration, the sale of such shares could have a material
adverse effect on our ability to raise additional capital.
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<PAGE> 20
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. Our SEC filings are available to the public over
the Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at
1-800-732-0330 for further information on the public reference rooms.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to these documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings made with the SEC
under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until the selling stockholders sell all of their common stock:
- Annual Report on Form 10-K for the fiscal year ended October 31,
1999, as amended;
- Quarterly Report on Form 10-Q for the fiscal quarter ended January
31, 2000; and
- The description of the Company's common stock contained in Form 8-A.
To obtain a copy of these filings at no cost, you may write or telephone
us at the following address:
Chief Financial Officer
Martek Biosciences Corporation
6480 Dobbin Road
Columbia, Maryland 21045
(410) 740-0081
This prospectus contains forward-looking statements relating to future
events or our future financial performance. These statements are only
predictions and actual events or results may be materially different from our
predictions. In evaluating these statements, you should consider the various
factors identified in this prospectus, including but not limited to the matters
set forth under the heading "Risk Factors," which could cause actual results to
differ materially from those indicated by such forward-looking statements.
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<PAGE> 21
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. Neither we nor the
selling stockholders have authorized anyone else to provide you with different
information. Neither we nor the selling stockholders are making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus is accurate as of any date other
than the date on the front of the prospectus.
RECENT DEVELOPMENTS
On April 4, 2000, the Company announced that it signed a non-exclusive
license agreement with Abbott Laboratories for Martek's technology relating to
the use of long-chain polyunsaturated fatty acids in infant formulas. The
agreement provides for initial cash payments and would give Martek an ongoing
royalty upon Abbott's introduction of products using Martek's technology for DHA
and ARA.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common shares or
warrants by the selling stockholders. If all the warrants are exercised in full,
the Company will receive up to approximately $11.2 million, which will be used
for general corporate purposes. There can be no assurance, however, that the
selling stockholders will exercise the warrants in full or at all.
SELLING STOCKHOLDERS
This prospectus relates to the offering by the selling stockholders
named in this prospectus of up to 2,865,768 shares of common stock and 804,891
common stock purchase warrants. All of the selling stockholders have acquired
common stock in private placements and may acquire additional shares of common
stock upon the exercise of warrants issued in the private placements.
The following table sets forth important information with respect to the
selling stockholders as of March 17, 2000, as follows:
- the name and position or other relationship with Martek within the
past three years of the selling stockholders;
- the number of Martek's outstanding shares of common stock
beneficially owned by the selling stockholders (including shares
obtainable under warrants exercisable within sixty (60) days of
March 17, 2000) prior to this offering;
- the number of shares of common stock and warrants being offered
through this prospectus; and
- the number and percentage of Martek's outstanding shares of common
stock to be beneficially owned by the selling stockholders after the
sale of common stock being offered through this prospectus.
The selling stockholders do not have to sell all of the shares and
warrants that they own.
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<PAGE> 22
<TABLE>
<CAPTION>
Number of
Shares Shares Beneficially
Beneficially Number of Number of Owned After the
Owned Prior Shares Warrants Owned Offering
Selling to the Offered and Offered
Stockholder Offering Hereby (1) Hereby Number Percentage
----------- -------- ---------- ------ ------ ----------
<S> <C> <C> <C> <C> <C>
Vector Later-Stage
Equity Fund II, L.P.(2) 164,300 164,300 61,172 0 *
Moore Global
Investments, Ltd. 721,019 721,019 162,131 0 *
Remington
Investment
Strategies, L.P. 158,272 158,272 35,590 0 *
J. N. Whipple, III
(3) 379,999 97,699 24,469 282,300 1.6
Buena Vista
Partners, LLC 48,850 48,850 12,235 0 *
Vector Later
Stage Equity Fund (QP),
L.P.(2) 492,903 492,903 183,517 0 *
Black Bear Fund I,
L.P. 568,866 215,966 49,838 352,900 2.0
Black Bear Fund II,
L.L.C. 47,559 20,877 4,818 26,682 *
Black Bear
Offshore Ltd. 504,597 219,566 50,669 285,031 1.6
Black Bear Pacific
Master Fund Unit
Trust 107,448 36,548 10,964 70,900 *
George Haywood 1,107,584 431,934 99,677 675,650 3.9
State of Wisconsin
Investment Board
(4) 2,227,612 575,912 132,903 1,651,700 9.5
</TABLE>
-21-
<PAGE> 23
<TABLE>
<S> <C> <C> <C> <C> <C>
MFS Mid Cap
Growth Fund (EXOT) 368,071 187,171 43,193 180,900 1.0
MFS Mid Cap
Growth Fund (OTC) 183,085 100,785 23,258 82,300 *
MFS New Discovery
Fund (NDF) 143,978 143,978 33,226 0 *
MFS/Sun Life New
Discovery Fund
(NWD) 7,199 7,199 1,661 0 *
MFS New Discovery
Fund (UND) 720 720 166 0 *
AGR Halifax Fund,
Ltd. 35,994 35,994 8,306 0 *
</TABLE>
- ---------------------
(1) Consists of shares of common stock currently owned by the selling
stockholders and offered hereby as well as shares of common stock issuable
to such selling stockholders upon exercise of warrants currently held and
offered hereby by such selling stockholders.
(2) Sandra Panem, a director of the Company since May 1995, was the President of
Vector Fund Management, L.C.C., ("VFM"), which is the general partner of
Vector Later-Stage Equity Fund II, L.P. ("VLSEF II") and Vector Later-Stage
Equity Fund II (QP), L.P. ("VLSEF QP"), and a Senior Vice President of
Vector Asset Management, Inc., which is the managing member of VFM and is
the general partner of Vector Fund Management L.P., the general partner of
Vector Later-Stage Equity Fund, L.P. Ms. Panem resigned from all positions
with the various Vector entities in 1999.
(3) Includes 36,000 shares of common stock currently owned by J.N. Whipple,
Inc., a company controlled by J.N. Whipple. Mr. Whipple disclaims beneficial
ownership of the shares of common stock held by J. N. Whipple, Inc.
(4) The State of Wisconsin Investment Board holds the securities for the benefit
of the Wisconsin Retirement Trust.
PLAN OF DISTRIBUTION
The common stock being offered by the selling stockholders, or by their
respective pledgees, donees, transferees, or other successors in interest, will
be sold in one or more transactions (which may involve block transactions) on
the Nasdaq Stock Market or on another market on which the common stock may from
time to time be trading, in privately-negotiated transactions, through the
writing of options on the common stock, short sales or any combination thereof.
The sale price to the public may be the market price prevailing at the time of
sale, a price related to the prevailing market price or at any other price as
the selling stockholders determine from time to time. The common stock may also
be sold pursuant to Rule 144. The
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<PAGE> 24
selling stockholders shall have the sole and absolute discretion not to accept
any purchase offer or make any sale of common stock if they deem the purchase
price to be unsatisfactory at any particular time.
The selling stockholders may also sell the common stock directly to
market makers acting as principals and/or broker-dealers acting as agents for
themselves or their customers. Brokers acting as agents for the selling
stockholders will receive usual and customary commissions for brokerage
transactions, and market makers and block purchasers purchasing the common stock
will do so for their own account and at their own risk. It is possible that the
selling stockholders will attempt to sell shares of common stock in block
transactions to market makers or other purchasers at a price per share which may
be below the then market price. In addition, the selling stockholders or their
successors in interest may enter into hedging transactions with broker-dealers
who may engage in short sales of common stock in the course of hedging the
positions they assume with a selling stockholder. There can be no assurance that
all or any of the common stock offered hereby will be issued to, or sold by, the
selling stockholders. The selling stockholders and any brokers, dealers or
agents, upon effecting the sale of any of the common stock offered hereby, may
be deemed "underwriters" as that term is defined under the Securities Act or the
Exchange Act, or the rules and regulations thereunder.
The selling stockholders and any other persons participating in the sale
or distribution of the common stock will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder. These rules may limit
the timing of purchases and sales of any of the common stock by the selling
stockholders or any other person participating in the distribution. Furthermore,
under Regulation M, persons engaged in a distribution of securities are
prohibited from simultaneously engaging in market making and other market
activities with respect to the common stock for a specified period of time
before the distribution begins. These restrictions may reduce the marketability
of the common stock.
Martek has agreed to indemnify the selling stockholders, or their
respective transferees or assignees, against potentially significant
liabilities, including liabilities under the Securities Act, or to contribute to
payments these selling stockholders or their respective pledgees, donees,
transferees or other successors in interest, may be required to make.
LEGAL MATTERS
Certain legal matters with respect to the common shares, warrants and
warrant shares offered hereby has been passed upon for the Company by Hogan &
Hartson L.L.P., Baltimore, Maryland.
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<PAGE> 25
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements included in our Annual Report on Form 10-K for the year ended October
31, 1999, as set forth in their report, which is incorporated by reference in
this registration statement. Our financial statements are incorporated by
reference on Ernst & Young LLP's report, given on their authority as experts in
accounting and auditing.
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<PAGE> 26
===============================================================================
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE
HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING
STOCKHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
------------------------
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
The Company ...................................... 2
Risk Factors ..................................... 2
Where You Can Find More Information .............. 19
Recent Developments .............................. 20
Use of Proceeds .................................. 20
Selling Stockholders ............................. 20
Plan of Distribution ............................. 22
Legal Matters .................................... 23
Experts .......................................... 24
</TABLE>
MARTEK BIOSCIENCES CORPORATION
COMMON STOCK
AND
WARRANTS
------------------------
PROSPECTUS
------------------------
April , 2000
===============================================================================
<PAGE> 27
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses to be paid by the
Company in connection with the issuance and distribution of the securities being
registered hereby. All the amounts are estimates, except the Commission
registration fee. The selling stockholders will bear the cost of all selling
commissions and underwriting discounts with respect to the sale of any
securities by them.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee $ 119
Legal fees and expenses ........................ 9,000
Accounting and Miscellaneous expenses........... 10,881
Total..................................... $ 20,000
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the General Corporation Law of the State of
Delaware (the "DGCL"), a corporation may indemnify its directors, officers,
employees and agents and its former directors, officers, employees and agents
and those who serve, at the corporation's request, in such capacities with
another enterprise, against expenses (including attorney's fees), as well as
judgments, fines and settlements in nonderivative lawsuits, actually and
reasonably incurred in connection with the defense of any action, suit or
proceeding in which they or any of them were or are made parties or are
threatened to be made parties by reason of their serving or having served in
such capacity. The DGCL provides, however, that such person must have acted in
good faith and in a manner he or she reasonably believed to be in (or not
opposed to) the best interests of the corporation and, in the case of a criminal
action, such person must have had no reasonable cause to believe his or her
conduct was unlawful. In addition, the DGCL does not permit indemnification in
an action or suit by or in the right of the corporation, where such person has
been adjudged liable to the corporation, unless, and only to the extent that, a
court determines that such person fairly and reasonably is entitled to indemnity
for costs the court deems proper in light of liability adjudication. Indemnity
is mandatory to the extent a claim, issue or matter has been successfully
defended.
Article ELEVENTH of the Company's Certificate of Incorporation provides
that the Company will indemnify its directors and officers to the full extent
permitted by law and that no director shall be liable for monetary damages to
the Registrant or its stockholders for any breach of fiduciary duty, except to
the extent provided by applicable law (i) for any breach of the director's duty
of loyalty to the Registrant or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the DGCL, or (iv) for any transaction from
which such director derived an improper personal benefit. In addition, under
indemnification agreements with its directors, the Registrant is obligated, to
the fullest extent permissible by the DGCL, as it currently exists or may be
amended, to indemnify and hold harmless its directors, from and against all
expense, liability and loss reasonably incurred or suffered by such directors.
II-1
<PAGE> 28
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
Exhibit
Number Exhibit Description
4.1* Form of certificate representing shares of Martek common stock, par
value $0.10 per share (filed as Exhibit 4.01 to the Company's
Registration Statement on Form S-1, File No. 33-68922, declared
effective November 23, 1993, and incorporated herein by reference).
5 Opinion of Hogan & Hartson L.L.P. (to be filed by amendment).
23.1* Consent of Ernst & Young LLP, as independent auditors for the
Company.
23.2 Consent of Hogan & Hartson L.L.P. (included in their opinion filed
as Exhibit 5).
24* Powers of Attorney (included in the Signature Page to this
Registration Statement).
--------------------
*Filed herewith.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to section 13 or
section 15(d) of the Securities and Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d)
II-2
<PAGE> 29
of the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 30
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the County of Howard, State of Maryland on April 10, 2000.
MARTEK BIOSCIENCES CORPORATION
By /s/ Henry Linsert, Jr.
-----------------------------
Henry Linsert, Jr.
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Henry
Linsert, Jr., Peter L. Buzy and Michael J. Silver, and each of them, with full
power of substitution and resubstitution and each with full power to act without
the other, his or her true and lawful attorney-in-fact and agent, for him or her
and in his or her name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange Commission
or any state, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or any of them, or
their, his or her substitutes or substitute, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Date: April 10, 2000 /s/ Henry Linsert, Jr.
----------------------
Henry Linsert, Jr.
Chief Executive Officer and Director
(Principal Executive Officer)
Date: April 10, 2000 /s/ Peter L. Buzy
-----------------
Peter L. Buzy
(Chief Financial and Accounting Officer)
Date: April 10, 2000 /s/ Jules Blake
---------------
Jules Blake
Director
Date: April 10, 2000 /s/ Gordon S. Macklin
---------------------
Gordon S. Macklin
Director
Date: April 10, 2000 /s/ Ann L. Johnson
------------------
Ann L. Johnson
Director
Date: April 10, 2000 /s/ Douglas J. MacMaster, Jr.
-----------------------------
Douglas J. MacMaster, Jr.
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<PAGE> 31
Director
Date: April 10, 2000 /s/ John H. Mahar
-----------------
John H. Mahar
Director
Date: April 10, 2000 /s/ Sandra Panem
----------------
Sandra Panem
Director
Date: April 10, 2000 /s/ Richard J. Radmer
---------------------
Richard J. Radmer
Director
Date: April 10, 2000 /s/ Eugene H. Rotberg
---------------------
Eugene H. Rotberg
Director
Date: April 10, 2000 /s/ William D. Smart
--------------------
William D. Smart
Director
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<PAGE> 32
EXHIBIT INDEX
Exhibit
Number Exhibit Description
4.1* Form of certificate representing shares of Martek common stock, par
value $0.10 per share (filed as Exhibit 4.01 to the Company's
Registration Statement on Form S-1, File No. 33-68922, declared
effective November 23, 1993, and incorporated herein by reference).
5 Opinion of Hogan & Hartson L.L.P. (to be filed by amendment).
23.1* Consent of Ernst & Young LLP, as independent auditors for the
Company.
23.2 Consent of Hogan & Hartson L.L.P. (included in their opinion filed
as Exhibit 5).
24* Powers of Attorney (included in the Signature Page to this 24*
Registration Statement).
--------------------
*Filed herewith.
<PAGE> 1
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3 No. 333-00000) of Martek Biosciences
Corporation for the registration of 26,200 shares of its Common Stock, 7,858
Warrants to Purchase Common Stock, and 7,858 shares of Common Stock Underlying
Warrants, and to the incorporation by reference therein of our report dated
December 14, 1999, with respect to the financial statements of Martek
Biosciences Corporation included in its Annual Report (Form 10-K) for the year
ended October 31, 1999, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Vienna, Virginia
April 7, 2000
